Smart China SHARE. Smartphones Make Us Smarter
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1 China s smartphone penetration has reached 71% in Those who own both a smartphone and a computer spend an average of 124 minutes on smartphone, only 14 minutes less than the time they spend on computer. It is no exaggeration to say that smartphone has become an increasingly important companion in our daily life: we find our phone the first thing we open our eyes in the morning, and we check our phone before class or work, as we do before sleeping. The smartphone seems to be evolving beyond tool status, said Neil Wu Becker, director of global research at Cisco. It's more of an appendage that satisfies our craving to stay connected, and contributes to our sense of wellbeing. The mobile terminal has changed from a black-white screen chunk to a delightful-looking elegant smartphone, with functions expanding dramatically from voice conversation to cover every aspect of life and work, such as social networking, games, news, shopping, mobile TV, and stock trading, to name but a few. Our reliance on smartphone, in essence, is our reliance on the increasingly intelligent life that it brings us. In a sense, smartphones are making our life even smarter. Phoebe Wang Associate Account Director Millward Brown China phoebe.wang@millwardbrown.com Successful talent show stars public image Data source: Tencent Report on Smartphone Penetration in Asia Pacific Astonishing Growth, 1
2 Devices Driven by the huge commercial potential of the smartphone business, phone manufacturers are developing a wide variety of fancy phones to attract the consumers and broaden their scope of choice. Among the smartphone operating systems, Android without doubt has the lion s share. In terms of smartphone brands, Samsung continues to be the market leader with an 18% market share, with over 38% users choosing Samsung as their next phone, followed by Apple, with 24% users choosing it as their next phone. On the other hand, as domestic brands step up their input in the smartphone market, a growing number of domestic brands such as Xiaomi, Huawei and Lenovo have gained popularity among the consumers, pitting themselves directly against Samsung and Apple. Users current smartphone and desired next smartphone brand High-end phones are constantly emerging with falling prices. Looking forward, high-end phones will remain popular and, in particular, get a stronger enthusiasm from female consumers. It is expected that inch 12 million-pixel phones will be the most popular phone types, pointing to a trend of buying larger, faster and smarter phones among Chinese users. The survey finds that consumers are attaching greater importance to basic functions such as anti-wear, water-proof and anti-fouling when buying new phones, but obviously, these functions alone are not enough to appeal to the increasingly discerning consumers. Innovative features which are offered on the basis of guaranteed basic functions and geared to address existing drawbacks (improved screen readability in bright light), introduce new features (portable projector, connection to other electric screens, etc.), and strengthen user UE (resistive touchscreen, voice control, automatic malfunction alarm, etc.) are expected to become major selling points in the future. Users focus on functions when choosing smartphones 2
3 It is worth noting that there are remarkable differences between male and female consumers when buying new phones, with male consumers focusing more on user experience and technical specifications such as memory, CPU and operating system while female consumes paying greater attention to camera pixels and phone appearance. So consideration should be given to different preferences of target consumers in product design and marketing. Comparison of factors important to male and female smartphone buyers Smartphone Activities Mobile social networking Social networking apps and occasions of use 70% of the respondents said that they had used smartphone for social networking in the past week. Mobile social networking has become the most important feature of smartphones after giving and answering calls. The most frequently used mobile-based social networking sites are Mobile QQ, WeChat, Qzone, Tencent Weibo and Sina Weibo. The social media is used by different age groups in China: the age group of junior and high school students customarily use Mobile QQ; the age group of college students tend to gather on Renren.com; the age group of white collars use microblogs more often, especially Sina Weibo; and the age group like to play games on Kaixin001.com. 3
4 There is a theory that men are from Mars and women are from Venus. In fact, men and women are also different in their phone habits. Women like to log into a few popular social media websites while watching TV, while men tend to use all small bits of time on a diversity of diversions, with a greater interest in finding friends. Mobile game Mobile game is the second most used smartphone function, next to social networking, with 64% of the respondents stating that they had played smartphone games in the past week. The behavioral differences between men and women are very obvious in the use of mobile games. Men like racing games while women prefer puzzle games. Men and women are also different in the occasions of game playing, with women liking to play mobile games as they watch TV, while men often play mobile games on mass transit and during outdoor activities. All know that games are the main contributor to Internet revenues. The development of paid mobile games naturally has received a lot of attention. The survey finds that 29% of mobile game players are willing to pay for games, with a higher percentage in the high-income groups (monthly income over RMB8,000) and male players. So it seems that not just cheerful life strugglers are willing to pay for games, but as always, the moneyed folks are the main payers for mobile games. Then, what will be the outlook of mobile games? The answer is optimistic. According to the China Mobile Game Market Quarterly Research Report Q released by iimedia Research, a leading third-party data mining and integrated marketing agency in the mobile internet, although Chinese mobile game players have not completely embraced paid games, yet with the improvement of user experience of mobile games, some of the users will consider paying for high-quality games that they truly like. With the number of users willing to pay for mobile games expanding, there will be more potential for profit in the mobile game industry. Mobile news The world in the information age changes at every moment. Smartphones make it possible to be informed of whatever is happening in the world at any time and in any place. Smartphone users often use the bits of time before or after sleep or during rides to browse news. The top three mobile news platforms they use are Tencent, Baidu and Sina, with more users reading news through mobile browsers (78%) than users reading news through a mobile client (59%). News apps and occasions of use Percentage of mobile game players willing to pay for games 29% mobile game players willing to pay for games 4
5 Users in different age groups favor different mobile news service providers. The social mainstay group (aged 20-39) tend to like media with attitude like NetEase News, while more older people maintain their habit of browsing news on Sina. There is also a difference between men and women, with men preferring media with attitude and women favoring Tencent and Baidu news. by leveraging its differentiated advantages, continues to attract users to its mobile clients. Video apps and occasions of use Mobile Videos According to the Tencent TV Users U&A Survey Report, compared to 2012, 2013 has seen a remarkable growth of users of the mobile clients, with video watchers using smartphones far outnumbering those using Pad, indicating a surge of enthusiasm for mobile-based video watching. Online video clients used by users in Data source: Tencent TV Users U&A Survey Report In terms of platform choice, Youku and iqiyi have maintained their advantage in the PC client market and are two main mobile video platforms, with the newcomer QvodPlay also having a great number of users. The online TV service PPTV, In terms of gender difference, female users prefer Youku while male users use Tencent Video and QvodPlay far more than women. 5
6 Mobile shopping The e-commerce competition has extended from the PC sphere to the smartphone sphere. As smartphones become increasingly popular, many e-commerce websites have released their mobile clients to broaden their customer base. Gold-mining is the primary driver behind e-commerce companies efforts to tap into the mobile-based shopping market. A market research finds that mobile-based shopping has accounted for 33% of online shopping, with an average monthly spending at RMB390, and the market is constantly expanding. In the face of so big a market, no wonder the e-commerce companies have thronged into it. Taobao (inclusive of Tmall) is the first-choice platform of mobile shopping, with 89% respondents stating that they had done shopping via the mobile Taobao/Tmall platform in the past months, followed by JD.com by a significant gap, with only 38% respondents stating that they had bought things via its mobile client in the past six months. Other major e-commerce companies active in the mobile shopping market include QQ Mall, yhd.com and Amazon China. Mobile Shopping Platforms Mobile top-up is the most widely purchased (virtual) commodity (77%), followed by apparel products and electronic products. Categories of commodities bought via smartphone A gender difference is also present in mobile-based shopping behavior, with men favoring JD.com while women visiting Taobao and dianping.com more often, and with men buying more electronics and women buying more apparel and foods and having a stronger interest in coupons than men. Mobile Alipay is the most often used method of payment for mobile shopping, followed by mobile banking, especially the top four state-owned banks (ICBC, ABC, BOC and CCB). Internet finance has changed the ways people make purchases. We can now transfer money and do shopping without taking any cash. However, we have always been troubled by the technology as a double-edged sword issue. Mobile payment is even more convenient than PCbased payment, but it also faces more concerns about personal information theft and losses resulting from phone loss, in addition to various other issues such as low network speed and incomplete functions. Security, access speed and function expansion are important issues of mobile payment that have to be addressed. 6
7 User concerns about mobile banking At present, mobile video ads are still in the preliminary stage of development. In-app ads are a common form of mobile advertising, with 52% respondents being aware of them. The existing in-app ads are divided into splash screen ads, banner ads and inserts, which are used for different marketing purposes. The splash screen ads have a strong visual impact and are more capable of grabbing attention and interest, with a better effect in stimulating the user to search related information, while banner ads and inserts are good at fueling the desire to buy and peer recommendation. Factors that improve or harm user perception about mobile ads Effectiveness tracking Accordingly to openly available data, there were three major financing deals in the mobile advertising market in 2012, indicating the development momentum of smartphones as the spearhead of the mobile Internet. In 2013, savvy advertisers have smelled out the huge marketing potential of mobile video platforms. The Tencent TV Competitiveness Improvement Research Report 2013 predicts that the next year will see a significant increase of advertiser spending on mobile video ads. Media Used by Advertisers - Previous Year vs. Next Year (%) Base:111 Data source: Tencent TV Competitiveness Improvement Report 2013 As known to all, mobile marketing is still in embryo. As the users generally don t like such ads, the deployment of such ads must take into account the users perception, with the understanding that mandatory ads giving no regard to the users feelings would likely harm their existing good perception of the brands in question. Research finds that ads featuring special offers or interesting content can improve the users brand perceptions; to the contrary, ads that cannot be closed and ads which are mandatorily delivered but not liked by the users will cause a remarkable damage to the perceptions of the brands in question. 7
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